BRYAN, TX ---  Renewable fuel producer Terrabon is working on developing a new fuel that's nearly identical to petroleum gasoline but can be made from just about any kind of organic material -- from sewer sludge to cornstalks, the Houston Chronicle reported. 

"If you can make a molecule that looks a lot more like gasoline, that's the Holy Grail for the biofuels industry," Aaron Brady, an oil analyst with IHS Cambridge Energy Research Associates, told the Chronicle. 

But reaching that milestone won't be easy. Terrabon has had success with test batches and recently drew the backing of Valero Energy Corp. But the fuel still has not been proved on a large scale, the Chronicle reported. Ethanol also has a head start and has garnered much more political support. So for the time being, Terrabon officials are focused on fine-tuning their own process. 

"One of the reasons we built this was to find out what we didn't know," said Malcolm McNeill, Terrabon's CFO, standing next to the $3.5 million Bryan, Texas, research facility that the company calls Energy Independence I. At the facility, Terrabon has been testing a technology known as MixAlco. This technology, developed at Texas A&M University, uses an acid fermentation process that can convert "anything that rots," as one company official put it, into chemicals that can be further processed into gasoline. 

By the end of the summer, the Chronicle reported, Terrabon plans to produce about 300 gallons per day of "green gasoline" from chopped sorghum using the Bryan facility and a second in College Station that does the final conversion to gasoline. The company also hopes to begin building a much larger plant in Port Arthur with the backing of San Antonio's Valero Energy Corp. In April, Valero said it would be the lead investor in the first installment of equity financing for Terrabon.